E-commerce Subscription Market Booms

Posted Date 03/19/18

A study by McKinsey has found that subscription-based online shopping is gaining speed in the United States with a growing number of people opting for it. It’s worth noting early on, though, that churn rates are high, meaning online shopping subscribers have high expectations – something worth remembering by every online retailer.

McKinsey polled 5,000 people and found that 15% had subscribed for a shopping service over the past 12 months. This compares with 45% subscribing to streaming media services such as Netflix but the number is likely to continue growing. Most people have two subscriptions on average, although more than a third have three or more.

As regards types of subscriptions, there are three of these: curation, replenishment, and access. Curation subscriptions seem to be the most popular. These aim to surprise subscribers with highly personalized offerings or brand new products mostly in the areas of beauty, apparel, and food. These constitute 55% of total subscriptions.

Replenishment comes in second, accounting for 32% of the total. As the name suggests, replenishment subscriptions allow consumers to automate the purchase of regularly used items such as diapers or razors.

Access subscriptions are the least popular for the time being. These give consumers access to lower prices in exchange for a monthly subscription fee.

The poll found that the driver for consumers in choosing a subscription is the expectation of a great experience or a bargain – a finding that’s not at all surprising in the era of personalized experiences and bargain hunting. Perhaps the most important outtake from the study for e-retailers is this: if you don’t provide superb experiences, your subscribers will not give you a second chance.